I was under the weather last night and was not able to finish the article on the Gann Time Factor.
It will be tomorrows report.
Stocks closed sharply lower Wednesday as the market reacted to a poor U.S. bond auction.
Bearishly a declining dollar is undermining the bond market where as higher yields would typically backstop a currency.
When the long bond drops below par, all hell will break loose. But that is a subject for the weekend (Monday) report.
Our Keyser Soze setup triggered on trade below Monday’s low perpetuating downside acceleration.
By the end of the session the DJIA had tumbled 817 points. The SPX had lost 95 points and the HAZ had shed 270 points.
While large-cap indexes bore the brunt of selling, internal metrics revealed even deeper structural deterioration across the broader market.
Net declining issues surged to 2,196 on the NYSE and reached 2,840 on the NAZ, marking the WORST BREADTH READING OF THE YEAR.
This widespread weakness underpins that pressure is NOT limited to a handful of high profile stocks but reflects the top of Wave 2 rally (an A B C off the April 7 low) and the kickoff of a Wave 3 decline.
TLT in the bond market, triggered a Keyser Soze sell signal as well taking out the low of Monday’s outside up reversal day that was also a Gilligan buy setup THAT NEVER TRIGGERED LONG (ie TLT never rose above Monday’s high).
Yields climbed further as investors reassessed the outlook for U.AS. debt in a higher-rate, lower confidence environment. The 10 year yield rose to 4.60% and the 20 year yield climbed to 5.08%.
Homebuilding stocks got hammered.
These moves mirror concerns over long-term fiscal imbalances and the persistence of inflation, not just in the U.S. but globally. For example, Japans 40 year government bond yield reached its highest level in THREE DECADES this week, signaling that the inflation narrative remains global.
This weekends report will delve further into this systemic risk.
Technical indicators deteriorated meaningfully.
The McClellan Summation Indices for the NYSE and NAZ turned lower for the first time since April 14, when then began a rebound from the April 7th collapse. That rebound looks to have failed now.
In sum the SPX should be magnetized quickly to its 200 DMA and the massive open gap from May 12th.
180 degrees down from Monday’s high is 5814.
360 degrees down is 5662—basically gapfill.
IWM, The Truth Teller left a SEVEN DAY Island Top diving to Phil D Gap on yesterday’s plunge.
Downside follow thru should be the nail in the bull.
From IWM’s recent 210 high 90 degrees down is 196 which ties to its 50 day line.
Notably, yesterday’s downside in IWM comes well below its 200 day moving average.
A sign of the Bear.